20131211-Maybank_KERPL-Daily_Edge_12页_426kb

Daily Edge Summary - 11 December 2013

Core Content

The document provides an overview of market trends and investment recommendations from Greenwich Associates Poll 2013, focusing on financial indicators, analyst insights, and company-specific analyses. It includes key data from the Philippine Stock Exchange (PSEi), analyst contact details, and evaluations of various sectors and companies.

Main Points

Financial Indicators

• PSEi: Closed at 5,886.40, with a 2.04% decrease.
• Turnover (PHPm): Reached 7,005.07, up by 53.07%.
• PLDT ADR (USD): Closed at 59.68, down by 0.96%.
• PLDT ADR (PHP): Closed at 2,643.23, down by 0.65%.
• Ave interbank rate: Remained at 2.00% with no change (0 bps).
• PHP/USD rate: Closed at 44.26, down by 0.50%.

Analysts

• Head of Research / Economist: Luz Lorenzo, contact: (632) 849 8836, luz_lorenzo@maybank-atrke.com
• Other analysts and their contact details are also listed, including Laura Dy-Liacco, Rommel Rodrigo, Lovell Sarreal, Katherine Tan, and Ramon Adviento.

Top Idea: Gaming Sector

• RWM (PHP10.22): The document recommends BUY with a target price of PHP12.94.
• Travellers International Hotel Group, Inc. (TIHG) is the developer, owner, and operator of Resorts World Manila (RWM), the first integrated resort (IR) in the Philippines.
• Key reasons for the recommendation include:
  • Support from Genting Hong Kong (GENHK) as a 'junket'.
  • Proximity to NAIA airport and Villamor golf course, appealing to VIPs.
  • RWM has the most rooms among IRs.
• The target price is based on Phase 1: 12x FY14 EV/EBITDA, and Phase 2 and 3: 30% ROIC, 12x FY18 EV/EBITDA, discounted to end-FY14.
• The TP implies a 17x FY14 EV/EBITDA, comparable to the average of Macau casino operators and Bloomberg.

Market Talk

• ANS (A. Soriano Corp): The company increased its stake in AG&P International Holdings Ltd to 26.75% from 6.00%, acquiring the additional 20.75% for USD40m or around PHP1.76b.
• This revaluation prompted an increase in the target price to PHP7.64 from PHP7.48.
• The NAV is expected to increase by PHP303.21m by year-end.
• Mining Sector: Freeport-McMoran's Grasberg complex warned of a possible 40% production cut, which could lead to a supply shortage of 128 kt in 2014.
• Local Producers: Philex Mining Corp (PX – BUY) and Atlas Consolidated Mining and Development Corp (AT – Not rated) are expected to benefit from the potential rise in copper prices.
• Utilities Sector: Manila Electric Co (MER - SELL) plans to list PHP18.5b fixed-rate bonds on the Dealing & Exchange Corp. The bonds have a base offering of PHP15b, with an overallotment option of PHP3.5b exercised due to strong demand.
• Economy: Continued improvement in exports, rising 14% YoY to USD5.1b in October, with a cumulative increase in exports in the first 10 months of 2013.
• Electronics: Leading export growth at 15.8% in October, and 11.3% in September.
• Non-electronics: Experienced a 20% jump in production.
• Exports are aligned with the recovery of developed economies, especially Japan and the United States, which is expected to lessen the drag on GDP from external demand.

Key Information

RWM (Resorts World Manila)

• Ownership: 44%:44% joint venture between AGI and GENHK.
• Performance: In FY12, RWM was largely ramped, and TIHG recorded an EBITDA of PHP9.2b after an investment of PHP26.1b, translating into a 35% ROIC.
• Expansion: Phase 2 and 3 expansion, expected to be completed by 2Q17, will add up to 285 tables, 1,710 slots, and 1,710 electronic table games.
• Future Prospects: The opening of City Of Dreams Manila in 3Q14 is expected to expand VIP GGR through Melco Crown's connections.
• Financial Forecast: TIHG's EBITDA and net profit are expected to grow by 12% and 13% CAGR respectively over three years, driven by economic growth. The company is projected to have a net cash balance sheet by end-FY13, enabling 'Phase 4' expansion or increased dividends.

ANS (A. Soriano Corp)

• Target Price: Increased to PHP7.64 from PHP7.48.
• NAV Revaluation: The original 6% stake in AG&P is expected to be revalued to PHP508.46m from PHP202.25m, with an unrealized gain of PHP303.21m.
• 9M13 Performance: Profits rose by 25% YoY to PHP1.39b, with 70% of the increase from investment gains.
• 2013 Profit Estimate: Raised by 15% to PHP1.75b.
• 2014 Forecast: PHP1.14b net profit.
• Valuation Metrics:
  • Pre-tax income: PHP1.818b
  • Net profit to common: PHP1.745b
  • Core EPS: PHP1.38 in 2013F
  • EPS growth: 29.35% in 2013F
  • PER: 4.9 in 2013F
  • P/BV: 0.6 in 2013F
  • Net P/BV: 13.35
  • Target Price: PHP7.64

Other Market Highlights

• Stocks with Earnings and Valuation Data:
  • BDO: BUY, target price PHP98.00, upside 40%
  • BPI: HOLD, target price PHP96.00, upside 8%
  • CHIB: HOLD, target price PHP57.75, upside (2)%
  • EW: BUY, target price PHP31.80, upside 28%
  • MBT: BUY, target price PHP107.70, upside 47%
  • PNB: BUY, target price PHP111.00, upside 39%
  • ALI: BUY, target price PHP39.50, upside 57%
  • FLI: BUY, target price PHP2.48, upside 103%
  • RLC: BUY, target price PHP25.17, upside 26%
  • SMPH: UNDER REVIEW, target price PHP20.34, upside 35%
  • VLL: BUY, target price PHP6.70, upside 38%
  • JFC: HOLD, target price PHP191.00, upside 16%
  • PIP: BUY, target price PHP6.05, upside 42%
  • RFM: BUY, target price PHP6.05, upside 16%
  • URC: BUY, target price PHP154.00, upside 31%
  • PF: BUY, target price PHP310.00, upside 42%
  • DMPL: BUY, target price PHP43.50, upside 83%

The Week Ahead

• 17 Dec: Century Peak Metals Holdings Corporation
• 19 Dec: Philcomsat Holdings Corporation
• 20 Dec: Paxys, Inc., BHI Holdings, Inc., Geograce Resources Philippines, Inc., Dizon Copper Silver Mines, Inc., Calata Corporation, Millennium Global Holdings, Inc.
• 24 Dec: Cyber Bay Corporation
• 26 Dec: Steniel Manufacturing Corporation

Summary Table (Key Financial Metrics)

Conclusion

The report highlights strong performance in the gaming and mining sectors, particularly with RWM and ANS, while also noting the continued improvement in the economy through export growth. It recommends BUY for several stocks, including RWM, ANS, BDO, EW, MBT, PNB, ALI, RLC, URC, and PF, based on their financial performance and projected growth. The document also outlines the upcoming events in the market and provides a detailed table of earnings and valuation metrics for various stocks.